New tax rules for 2007 will bring about a good year for the poorest of tax-filers in Maryland. Tax-filers can now earn up to $37,000 and still be entitled to the Earned Income Tax Credit that will put more money in their pockets this year than it did last year, but there are rules and qualifications necessary to claim the credit.
It is a benefit that many tax-filers take advantage of, say federal and state income tax experts.
The credit allows a worker who has no withholding or very little withholding to get more money back. That money can really come in very handy and people should look into it, she said.
There are allowances to have some or all of the credit returned, because not like a deduction (which decreases the amount of tax due on income), a credit counts as money paid to tax officials in the same way as withholding.
According to the Census Bureau, the number of tax-filers that earn less than $15,000 in 1980 dropped from $33,400 to $15,300 ten years later. Statistics confirm that in the year 2000 there was $11,900 tax-filers category.
When the Earned Income Tax Credit first started in 1975, the aim was to compensate for the Social Security tax while alleviating the load on low and moderate-income workers. IRS spokesperson Jim Dupree said that 20 percent of Americans do not even claim for the credit that is entitled to them.
He explained that some people do not know that even though they do not make a lot of money, or work very often, that they are eligible for the credit. Even though these people do not have to file a return, they still should, or they will be losing out on the credit that is due to them.
According to Mr. Dupree, single workers who earn less than $8,450 or couples who earn less than $16,900 in gross annual income are exempted from filing a tax return. However, the good news is that based on the size of a family a refund could be received ranging from $412.00 to $4,536.00, and that is only for claiming the credit.
One recent tax-filer qualified for the earned income tax credit even though he had no money held back from his paychecks. He was able to get back $1,500 on his tax return.
Comptroller William D. Schaefer states that if you worked in 2006, especially if you have children, and even if you were exempt from paying state taxes, you may qualify for the state’s earned income tax credit. It is something worth looking into, said Mr. Schaefer.
Earnest Young is an Accounting and tax writer for Accent Accounting & Taxes - http://accentaccounting.net